Blain’s Morning Porridge June 17^th, 2026 – Margaret Thatcher’s wailing ghost stalks the land!

“I am extraordinarily patient, provided I get my own way in the end.”

The Russians are deliberately provoking the UK in the English Channel – seeking to demonstrate that “Broken Britain” lacks the will, the resources and resilience to rebuild itself. The imminent Nationalisation of failing water utility Thames Water highlights how decisions made decades ago have had consequences that are costing the nation dear today.

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Before getting into the main story on the Morning Porridge – the latest in the sorry tale of Thames Water – let me write about yesterday’s brazen intimidation of a British Yacht, the Bright Future, in foggy conditions in the English Channel yesterday. Regular readers will know I am a passionate sailor, and I’ve crossed the Channel many times in daylight, at night, in storms and in periods of calm, including foggy days.

The fact there is practically nothing the UK can do to stop UK shipping being harassed by the Russians in our home waters is a consequence of the many years of neglect of our Armed Forces by successive governments. It’s another lesson in the consequences of bad policy and poor decisions.

Given modern navigation systems, GPS and VHF radio (all yachts monitor channel 16 at all times – especially when its foggy), there is absolutely no need for anyone to be shooting guns for any reason in the Channel – unless they want to make a point and cause a furore. The navigation rules for crossing the Shipping Lanes are well understood – except, apparently, by the Russians when they want to make a point. (It’s also a response to Royal Marines seizing a Ghost Fleet Tanker last week.)

But let’s start with some history:

After losing their entire Pacific Fleet to an attack by the Japanese on Port Arthur, (shades on the now sunk Black Sea fleet today), in 1904 the Russian Baltic Fleet was dispatched Eastwards to continue the fight. While crossing the North Sea it encountered a British Fishing Fleet. Exhibiting the “common sense and tactical awareness” that characterises the Russian military mind the fleet proceeded to shoot up the fishing boats, killing British sailors and sinking a trawler. The Russians believed they were under attack by Japanese Torpedo Boats sent to ambush them. (In 1900 the range of a torpedo boat would be a few hundred miles, and its 14,000 miles from Japan to the North Sea.)

In May 1905 the Japanese ambushed the same Russian fleet. At the Battle of Tsushima (in the Sea of Japan) they sank or captured all 11 Russian Battleships in a one-sided engagement. The whole of Britain cheered for the plucky British-trained Japanese sailors! The Japanese flagship is now a museum (and was built in Britain!)

Yesterday a Russian warship, the Admiral Grigorvich, shot warning shots at the Bright Future as it was crossing the English Channel. The yacht was under sail – giving it priority – as it sailed slowly in foggy conditions. The Russians ignored the conventions of sailing, called the Rules of the Road. Power (i.e., engines) must give way to sail. If there is a risk of collision in the busy shipping lanes you use the radio and ship’s horn to warn the other party. The Stand-On vessel (the one with rights under the Rules of the Road) holds course and the other vessel takes avoiding action. In practice small yachts crossing the shipping lanes will alter course to avoid big cargo vessels.

It’s not clear if the Russian vessel had its AIS switched on, an automated identification system that would have displayed on the yacht’s electric chart plotter. If the AIS was switched off in foggy conditions while sailing the busiest shipping lanes on the planet, that just bad seamanship. It would have been deliberate.

The Russians would have easily seen the yacht on their radar (most yachts don’t have a radar.) Marine convention dictates if you have a radar, you must use it, and that includes the duty to inform another boat if you suspect it can’t see you – due to fog for instance.

The Russians did sound 5 blasts on their ship’s horn, a convention meaning “your intentions are unclear,” but taken in sailing circles to mean “WTF are you going”. Firing warning shots from 500 meters is utterly unacceptable and unnecessary. It looks amateur.

(One time on the radio I heard a US submarine surfaced in the Channel threaten to use “lethal force” towards a fishing boat getting too close, but they shut up after a very plummy English voice came over the radio reminding “the Yanks” that everyone with a radio in the Channel was listening to them threatening to commit murder. The Americans went quiet and no fishing boats went missing.)

The actions of the Russians yesterday represent a deliberate provocation of the UK, a deliberate insult to the flag of the Merchant Marine, The Red Duster. It was intimidation, reminding the Royal Navy its lack of resources and available warships allows the Russians to act with impunity in our home waters. The Russians will continue to pester and annoy us until the UK regains the force projection to act – by repairing and bringing ships back into to service, while aggressively countering Russian ships at sea, and continuing to seize Ghost Fleet vessels.

Back in the Real World – Thames Water

In the next few days a partial re-nationalisation, called “Special Administration”, of the failing Thames Water is on the cards. The government has rejected the first refinancing proposal to take over the utility by its’ current creditors (which includes distressed debt funds who bot up its debt at deeply distressed prices) because they fear the environment and customers will end up footing the bill. Special administration will cost around £4.3 bln – but potentially more if further infrastructure and environmental crises are uncovered. (The cost of a full nationalisation could top £20bln – enough to fill most of the black hole in the defence budget.)

It’s going to be a pivotal moment for Broken Britain. Will the government take the risk, or will it hand the “opportunity” back to the creditors? My bet is it will end up an expensive decision either way. Thames Water is a standout example of the UK’s uncanny ability to take poor policy decisions and execute them badly! The privatised water utility has become a poster child for environmental and customer failure, declining water quality, dismal public service, and under investment.

The creditor group, including Blackrock, Elliot and Apollo, have offered to inject £10 bln of new equity and debt, write off £9 bln of existing debt and fund around £20 bln of new investment through till 2030 to band-aid ageing pipes, leaks, and failing sewerage treatment. They will be looking for their return from the monopoly income it generates from 17 million customers and from figuring out the minimum infrastructure spend to keep it working, before spinning it back out for sale. As a result, they may be willing to pay more.

It’s a devil or the deep blue sea kind of choice. Activists don’t want to give a new cabal of private capital investors another bite to “pillage” the utility and nation for yet bigger returns. Financiers are warning that not giving control to creditors and nationalising the company without compensating the current owners will break confidence in the UK as an investment destination.

Let me remind you: US private capital and distressed funds don’t do charity – they are there because of the scent of opportunity.

How did it all go so wrong?

The consequences of bad decisions taken decades ago are coming home to roost, deeper than the potholes that plague our roads. The consequences of decisions made back in the 1980s have come back to haunt us. That wailing sound you can hear late at night is the Ghost of Margaret Thatcher. Many seeds of crisis were sewn during the reign of the UK’s most admired prime minister of the Modern Era. Poor dear… she thought she was acting for the best – Thatcher was not a lady to suffer from self-doubt.

Some of what seemed to be her best ideas have proved disastrous.

The Right to Buy scheme seemed a marvellous idea at the time, allowing social renters to purchase rented council housing at a fraction of its value, creating an expanded middle class of homeowners (who naturally became Tory voters). However, making home ownership the cultural norm resulting in scarcity driving UK housing prices to unaffordable levels, while the failure to replace sold-off housing stock means the nation now faces an acute shortage of rental stock – meaning young workers can’t find decent work because there is nowhere to live, and they can’t start family formation – accelerating the nation’s demographic decline.

(In my recent book, The Battle for Hamble, I describe how the UK’s homebuilders have arbitraged the housing market through Landbanking to keep home prices high, while the planning system is under-resourced, burying attempts to solve the social and affordable housing crisis is a midden of bureaucratic treacle.)

Privatisation has been a particular blight on the UK – leading to a significant decline the nation’s capital asset stock. All of the UK’s privatised utilities, from railways, energy, to the grid, face the consequences of decades of underinvestment. It’s reckoned repairing the UK’s potholed roads could cost £18bln – and then some!

But the privatisation of England’s publicly owned water companies in 1989 takes the biscuit. The idea was that private enterprise would run the nations’ ailing water infrastructure more efficiently and effectively than under public oversight, with better access to the capital to modernise it. Instead, the new owners of the water companies paid themselves enormous dividends, leveraged up on debt, and skimped on maintaining the Victorian infrastructure – investing far less than their franchises required.

The outcome is unrepaired leaks make one of the wettest nations on Earth subject to multiple hose-pipe bans, water shortages, constantly breaking pipes, sewage plants that can’t cope with the flow and rain discharging directly into rivers, declining river and beach water quality, and a national water system that could not handle a nearly 20% increase in demand.

And rather than the water companies accepting the blame for their failed management of the system – they’ve managed to persuade many legislators and the commentariat to pin the blame on the regulator, Ofwat, for not regulating them sufficiently!

If it wasn’t so seriously fecked up… I’d laugh.

Out of time and back to the day job…

Bill Blain

Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital

Meanwhile, don’t forget about my new book:

The Battle For Hamble is a proper grown-up examination of how bureaucracy has failed: a tale of Greedy Corporates, Bad Planning and Economic Illiteracy. It explains how a wholly unnecessary Gravel Quarry will be dug in middle of a prosperous village – putting 6000 jobs at risk. The truth is no one wants gravel, and the quarry company understands it’s not what you dig out, but what you stuff back into a hole in the ground that matters. Gravel sells for £30 a tonne – Landfill earns £150 a tonne to bury. Go figure.